23 countries including Saudi Arabia will reduce crude oil production; How expensive can petrol-diesel be in India?

OPEC Plus member countries including Saudi, Russia have decided to cut oil production in the coming times. This announcement of OPEC Plus has increased the concern of the whole world. After this step of the organization, the price of Brent crude oil has increased by 8 percent in the international market. 

If understood in simple language, after the decision of 23 countries including Saudi Arabia to reduce oil production, the production of about 190 million liters of crude oil will be reduced everyday. That is, there is a possibility of an increase in the price of oil by up to $ 10 per barrel. This decision of these countries can also affect the price of petrol diesel in India.

How many countries are included in OPEC Plus 

OPEC Plus  (Organization of Oil Exporting Countries) is made up of a group of 23 oil exporting countries. OPEC was created in September 1960 at the Baghdad Conference. The purpose of this organization is to regulate the supply of oil to determine the price of oil in the world market. To understand in simple language, OPEC Plus optimizes the supply and demand of oil to keep the market balanced. When oil demand falls, OPEC Plus lowers supply and raises oil prices.

While OPEC Plus countries include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan along with 13 OPEC member countries. 

What decision was taken by OPEC+ countries 

OPEC+ countries have recently decided that these countries will cut the production of 11.6 lakh barrels i.e. about 190 million liters of oil every day. 40 percent of the total crude oil production in the world is done in OPEC group countries only. Compared to last year’s oil production, Saudi Arabia will produce 5 percent less oil than last year. Similarly, Iraq has decided that it will cut the production of about 2 lakh barrels of oil every day. Apart from this, UAE, Oman, Kuwait and Algeria are also going to reduce production.

Who said what on the decision to increase oil production

Saudi Arabia’s Ministry of Energy said, ‘This step has been taken as a precaution due to the possibility of recession in the economy.’ He said that the decision to reduce oil production is being taken as a precautionary measure keeping in mind the stability of the oil market.

Russia’s Deputy Prime Minister Alexander Novak said on the decision of OPEC Plus countries, "OPEC Plus country has taken this decision because the market is unstable and there is more oil than required in the international market."

Why are Arab countries cutting back?

According to the OPEC countries, this step is being taken in view of the instability in the global economy. But analysts say there could be other reasons.

Renowned energy expert Narendra Taneja answered the same question in a BBC report and said,  " OPEC plus country will cut oil production by about 1.6 million barrels per day and these rules will come into effect from May."

One reason for this decision has been mentioned above, but there is another reason as well, now America’s strategic reserve i.e. oil reserve for emergency has become extremely low. This means that now America will once again start buying oil in large quantities to fill its storage.

In such a situation, if the price of oil increases, then America will have to pay a heavy price to fill its storage. This country is already facing the sound of recession. Now if oil prices increase further, America will have to spend more.

Narendra Taneja further says that with this decision OPEC country wants to show the world or global market that it can set the price on its own and OPEC itself will decide how much oil it has to produce. Let us inform that earlier Saudi Arabia used to live under the influence of America, but now it seems that Saudi Arabia is indicating to America that it is the master of its own will in the matter of its oil."

Why America’s oil reserves started running out 

In the month of February last year, when the war between Russia and Ukraine started, the price of crude oil in the global market had reached $ 139 per barrel. Oil prices had never increased so much since 2008. After this, America and Russia also started selling their reserve oil in the global market. Due to which the supply of oil increased and in March 2023 the price of crude oil fell to $75 per barrel. 

What will be the effect of reducing oil production on India 

India is the third largest oil consumer in the world after America and China. Between April and December of the year 2022, a total of 1.27 billion barrels of oil was purchased by the country. India bought 19 percent of the total purchased oil from Russia. If you see the list of the last 9 months, you will find that India bought maximum oil from Russia. India has also saved up to $2 per barrel by buying oil from Russia.

In a BBC report Narendra Taneja says, " The decrease in oil production and increase in price will affect the Indian economy. Because India’s economy is based on oil and the country from which India is buying the most oil is also included in OPEC Plus. 

Due to increase in oil production, when the price of crude oil will increase in the international market, then the price of oil which is being received from Russia at the present discount price will also increase. Till now India used to get cheap oil from Russia. In fact, after the Russia-Ukraine war, many countries refused to buy oil from Russia. In such a situation, after the western sanctions, Russia needed a new market and India needed cheap oil. In such a situation, the business of oil was beneficial for India and Russia. 

But now apart from India, countries like Turkey, Pakistan and Morocco are also buying oil from Russia. In such a situation, as the market of Russia increases, the exemption given to India will decrease."

 Can oil prices go up drastically if production cuts

If the price of 1 barrel of oil increases by $10, then the country’s GDP growth decreases by 0.2%-0.3% and the country’s inflation rate increases by 0.1%. 

What is the ultimate secret of Saudi Arabian oil

Iran, Iraq, Kuwait, Saudi Arabia and the United Arab Emirates have the largest reserves of oil in the Middle East. These reserves of oil were found in the middle of the 19th century, but even today the possibility of getting oil here has not ended. 

After Russia, from which countries is India buying crude oil 

According to Vortex, a company that monitors energy cargo shipments, India buys the most oil from Iraq and Saudi Arabia after Russia in terms of crude oil supply. In the month of November 2022, Iraq has sent 8,61,461 barrels of oil daily to India and 5,70,922 barrels of oil daily from Saudi Arabia. America comes after these two countries. America has exported 4,05,525 barrels of crude oil to India every day in the month of November 2022. 

What is the current petrol diesel price in India

  • The price of petrol diesel is different in different cities. Petrol price in Bengaluru is Rs 101.99 per liter and diesel rate is Rs 87.89 per liter
  • Petrol rate in Chandigarh is Rs 96.20 per liter. And diesel costs Rs 84.26 per litre
  • Petrol costs Rs 102.63 per liter in Chennai. And diesel rate is Rs 94.24 per litre
  • Petrol rate in Gurugram is Rs 97.38 per liter and diesel rate is Rs 89.96 per liter
  • Petrol rate in Kolkata is Rs 106.03 per liter while diesel rate is Rs.92.76 per liter
  • Petrol rate in Lucknow is Rs.96.54 per liter and diesel rate is Rs.89.76 per liter
  • Petrol price in Mumbai is Rs.106.31 per liter is Rs. and diesel rate is Rs. 94.27 per liter
  • Petrol rate in Noida is Rs. 96.77 per liter and diesel rate is Rs. 90.08 per liter

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